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MTA Mythbusting: back again

Update, 2/4/10: Here we go again. The MTA will continue to be the punching bag of the media for something that’s entirely Albany’s fault, so I resurrect this post again with one new myth:

Myth: The new $400 million budget shortfall announced on February 3rd is the MTA’s fault.

The shortfall is entirely the fault of the state. Last year, to cover the budget gap that the MTA was facing, politicians in Albany opted for an increase in the payroll tax and a taxi surcharge to cover the gap, rather than a more stable solution like East River bridge tolls. The state projected that the MTA would receive $4.17 billion from the payroll tax over three years to help fund their operations. Now, the state has realized that they overestimated that tax revenue by a whopping $700 million (in December, they told the MTA they were off by $200 million, which spawned the currently proposed service cuts.

While this shortfall is a direct result of the recession, the state should have seen this coming. They promised a solution to the MTA’s budget woes and it fell short. Now (mark my words), those same people who championed the payroll tax solution will blame the MTA for their newfound budget shortfall.

I posted much of this rundown of myths about the MTA’s financial situation eight months ago, and unsurprisingly, it’s timely again. The MTA is again in dire fiscal straits, and the media and subway riders are all pointing their fingers squarely on the MTA, and their finger-pointing is without merit.

Now, enjoy this newly-updated version, which still includes some myths about bridge tolls and congestion pricing, since Bloomberg now indicates that it might be on the table again.

For extensive coverage of the MTA’s latest state-created fiscal crisis, head over to Ben Kabak’s Second Avenue Sagas.

Myth: The MTA is entirely to blame for this most recent deficit.

There are three main sources for this deficit:

1. In December 2009, the state stole $124 million of dedicated tax revenue from the MTA and placed it in the general fund to reduce their deficit.
2. The state provided the MTA with overly optimistic projections for payroll tax revenue – coincidentally, the tax that the State Senate passed to avoid a doomsday financial situation like this. Last week, the state announced that it had overshot projections by $200 million – an amount that the MTA anticipated to have in their budget.
3. A court refused to overturn an arbitrator’s decision to award the largest labor union of MTA workers an 11% raise over three years in the height of record unemployment, and layoffs and furloughs in the private sector. This will add $100 million in new labor expenses in 2010.

An argument can be made that the MTA should have accounted for the raise for union workers, since it was unlikely that the courts would overturn a ruling in binding arbitration. Regardless, though, the other two sources of the deficit were completely unexpected and for those, blame lies squarely with the state.

Myth: The MTA can find the money, somewhere, to cover this gap and stop the service cuts

When people say this, I ask, how? Nobody has an answer, they just have a feeling. Well, I invite anyone who wants to make this claim to go into the MTA’s financial statements and find enough money to fill their $400+ million deficit. It’s not possible. They are out of money. And there’s a good explanation, which brings me to my next myth.

Myth: The MTA is always in this mess and it’s their own damn fault

This is a cop-out when there’s no constructive criticism about the MTA’s finances, so let’s explain how the MTA got saddled with a deficit every year – and sometimes multiple times a year. One of its biggest sources of revenue is real estate transaction taxes. Look at what real estate has done in the past two years. That revenue has barely topped 50% of its projection. If the real estate market was booming, we might not be in as big a mess. Secondly, one of the MTA’s biggest expenses is paying down debt on bonds it took out during the Pataki administration, when the MTA was terribly underfunded and MTA money was diverted to road maintenance. These are two key reasons the MTA has had such a huge deficit for the past three years. Neither of these are within the control of the MTA, and especially not the MTA’s current management, which has been on the job for less than four months.

Myth: The MTA could’ve had public hearings on this before they voted on the service cuts.

The MTA is mandated by state law to balance their budget prior to the beginning of the calendar year. Hey, that’s in two weeks! These cuts to their budget all materialized in the past two weeks. To spin wheels and rush to hold a set of public hearings across the region would serve no useful purpose, would waste the MTA’s money, and would not stop any service cuts.

For those worried that the MTA Board’s debate and vote on service cuts will take place behind closed doors, today’s hearing will be webcast live online on the MTA’s site and then archived. It’s all part of the MTA’s often-ignored efforts to be more accessible and transparent.

Myth: The MTA has a responsibility to fund free fares for schoolchildren.

They don’t. In fact, they were doing it voluntarily – out of the kindness of their hearts. Okay, perhaps that’s too rosy a picture to paint, but it’s the city whose responsibility it is to provide transportation for students to and from school.

In the past ten years, the cost to the MTA of free student fares has nearly tripled. This isn’t because the fare has tripled – it’s because the MTA voluntarily took on the cost of free student rides when the city and state pulled back their money. Compared to 2000, when the MTA, city, and state were sharing the cost of student rides almost equally, the MTA now covers more than three-quarters of the cost – the city actually chips in a much smaller share than they did ten years ago, and the state now contributes almost nothing.

Myth: We should just raise fares again.

Who would say that? Nobody, most likely. But raising fares would further widen the MTA’s already huge credibility gap. The agency promised there would be no fare hike in 2010. If they raised fares in 2010, nobody would take them seriously again.

Besides, as New Yorkers, we don’t deserve higher fares.

Does that sound whiny and self-righteous? Probably, but let me explain. The New York City subway has the highest farebox recovery ratio of any public transit system in the United States. That is, the MTA relies on our passenger fares for over 60% of its revenue for the subway. As a basis for comparison, Chicago’s CTA has a ratio of 44%, LA County’s Metro has a ratio of 30%, and the lowly Staten Island Railroad’s passenger fares account for just 15% of its revenue. Where does the rest of its revenue come from? Mostly from state subsidies. And as we’ve already addressed, Albany gutted the MTA’s funding years ago.

Now, the state is again making riders face service cuts instead of adopting a system that would find a reasonable alternate revenue stream for the MTA: East River Bridge Tolls.

Myth: Putting a toll on the East River bridges would be unfair to the poor and would hinder open access to the city

This is the stance that politicians who opposed these tolls have taken, and it’s absurd. I could make plenty of arguments about drivers paying their fair share, cars contributing to pollution and congestion, and the fact that my tax dollars subsidize the maintenance of the roads that drivers use even though I don’t own a car. But let’s just cut to the chase: those who opposed adding a $2 toll to the East River bridges last year would rather see transit riders pay an additional 10% for their commute while car drivers get off scot-free.

Tell me, who do you think can afford to spend more money: a car owner who drives to their job in Manhattan, or someone who rides the subway every day? Nine times out of ten, it’s the former. Statistically, car owners make more money than subway riders, plain and simple.

The second part of this myth is a new point that surfaced toward the end of the early 2009 debate on tolls. That argument against East River tolls was that it would cut off Manhattan from the rest of the city, and would keep the five boroughs from being “open and accessible.”

This is absurd for two reasons: first of all, to anyone who doesn’t own a car, New York is already not “open and accessible.” I have to pay a subway fare (coincidentally, $2.25) to get to any other borough. Secondly, access between boroughs is already tolled, thanks to the Henry Hudson, Triborough, Bronx-Whitestone, Throgs Neck, Verazanno Narrows, and Marine Parkway Bridges, and the Queens Midtown and Brooklyn Battery Tunnels… all of which are more expensive to cross than the proposed toll on the East River bridges.

Myth: Adding tolls to the East River bridges will impact the cost of goods in Manhattan

This is a simple mathematics equation. Let’s say you have a small box truck that’s carrying half of its payload in tomatoes (roughly two tons). That small box truck would pay a $10 toll in the plan proposed by Sheldon Silver earlier this year. Let’s assume that the entire toll will be passed on to the consumer. How much more would a pound of tomatoes cost? One-quarter of a cent.

Of course, I forgot to mention that the tolls will likely take some cars off the road in Mahattan, making it easier for this truck to make its deliveries quickly without getting caught in traffic. So you might actually save close to $10 in labor costs for that truck driver.

Also, in March of 2008, the Port Authority raised the tolls on its Hudson River crossings by $2 for cars (more, naturally, for trucks). The inflationary change in the consumer cost of food between March and April in New York was 0.9%. This matched the national average. And by the way, a lot more of our food comes from New Jersey and west than from Long Island.

Myth: Adding tolls to the East River bridges will cause more congestion because of the addition of toll booths.

NO! I cannot believe the amount of times I’ve heard this argument, even from the most educated people. Have you ever heard of E-ZPass? Believe it or not, that technology can collect a toll at normal speeds, too. For those who do not have E-ZPass, cameras will capture their license plate numbers and they will be billed via mail. You may think that’s some pie-in-the-sky advanced technology, but it’s actually been around in North America for 13 years.

So, let me reiterate: there would be no toll booths on the bridges.

Myth: The MTA can just fire all those employees who do absolutely nothing all day – or at least cut their salaries

In a perfect world, this wouldn’t be a myth. As transit riders, we all see the waste firsthand, as employees sleep on the job, stand around and do nothing, and sit in their little booths and ignore customers. Believe me, I can guarantee you that many of the MTA board members wish they could lay off 10-20% of the MTA’s workforce to turn up the revenue they need.

First of all, in a time like this, do you think it’s politically expedient to lay off thousands of people in this economy, even if they could? Probably not.

But more importantly, the Transport Workers Union (TWU) and other labor unions representing transit employees have such a stranglehold on the MTA that there’s virtually no way to end this waste unless the MTA went private. It’s a terrible situation, but being opposed to unions is so politically unpopular in this city that nobody would be willing to take that stand publicly.

And lo and behold, in the midst of this crisis, courts refused to overturn an arbitrator’s decision that gave union workers at the MTA a 11% raise over the next three years. As a result, the MTA has to cough up that extra money, too.

By the way, to cover part of this deficit, 6,000 non-Union employees are taking a 10% paycut next year, including the top executives.

Myth: The MTA keeps “two sets of books”

Last April, during the MTA’s finance committee meeting, then-MTA chairman Dale Hemmerdinger said, “we must get away from this notion that the MTA keeps two sets of books.” Why? Because it’s just not true. THERE WERE NEVER TWO SETS OF BOOKS. It was an accusation made of the MTA by state comptroller Alan Hevesi nearly seven years ago – a charge that was resolved in court. And the board of the MTA should be offended by this accusation, since none of the members of the MTA’s leadership were in power back when this scandal broke in 2003. And in response to the scandal, the MTA became much more transparent, releasing all of their financial statements on their web site, and even holding webcasts about their finances. Oh, and to boot, Alan Hevesi was later found guilty of defrauding the state government.

But that’s not enough to satisfy the masses, apparently. Riders would rather get mad at the MTA for a seven-year old scandal than blame Albany, who knew for a year that this crisis was coming, waited until the last minute to rush a proposal through the legislature, and then decide to do nothing and let the transit riding public suffer through massive service cuts because educated politicians in Albany still believe that the MTA keeps two sets of books, no matter how many times they’re told otherwise.

Myth: Albany has the most corrupt, unopen, and incompetant state government in the entire country and voters need to clean house

Without the urging of constituents and the active participation of voters, the state and city will both continue to underfund the backbone of New York’s economy.

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26 Responses

The answer is simple, yet unpopular, break the union. The wages, pension, and benefits provided to the union workers in this country are nothing short of financial rape of the average taxpayer.

It’s not only the MTA union, but all public unions, from teachers, to prison guards, to clerical workers, they have spent decadeds raping the wallets of taxpayers to provide themselves with inflated salaries, outrageous pensions, and job security that the average worker couldn’t dream of achieving. What do we get in return? Inept, lazy, and often hostile “service”.

This post should be sent to the Channel 11 news, who’s lead story this morning (“If the MTA has its way…”) was completely misleading, as well as to the other media outlets. amNY would probably print it as-is: the free tabloids can use all the free journalism they can get (with no disrespect to Heather Haddon, the paper’s MTA beat writer, of course)

Excellent post Chris. Maybe Streetsblog can just cross-post this since these myths come up constantly. Also, take a look at MTA’s projected expenses for employee health care and Access-A-Ride. They more than double by 2013.

Great post. The common public misconceptions regarding the service cuts is borderline comical (and tragic) at times.

OTC – couldn’t agree more. I dream of a day when the MTA is able to break free of the stranglehold the TWU currently has on them. Unfortunately, I don’t ever see this happening. The TWU went berserk when the MTA announced they would appeal the decision to grant an 11% raise over three years – an action which was fully within the MTA’s legal rights. Could you imagine the reaction that would stem from the MTA announcing they are planning on dissolving the union?

I drive across 2 east river bridges (each way) most days to get to work. I would be glad to see a $2 toll if it meant less service cuts and fewer fare hikes. It’s outrageous that the City gives free street parking (on many streets, at least) and free bridge access to cars when the more environmentally-friendly mass transit riders are paying BOTH the taxes that fund road repairs AND the ridiculously expensive $2.25 fare.

And, by the way, I know i sound like a hypocrite since I drive to work. But i have horrible morning sickness these days, which is worsened in the subway, so trust me, i’m doing it out of necessity.

[…] continue to suffer, and nothing will get done. Possibly related posts: (automatically generated)MTA Mythbusting: back againMTA Trying Planning More CutsMTA, All the way?An Interesting Take on the Fare […]

Chris, the MTA was created in 1968 so extra money from TBTA facilities (i.e. the bridges and tunnels in the city with tolls) would go to the NYCTA (i.e. buses and subways). Does TBTA still make a profit? If yes, how much do they give to NYCTA? And would you consider it a myth that charging higher tolls on MTA automobile facilities could cover the mass transit deficit?

John, MTA Bridges and Tunnels is indeed the only division within the MTA that operates with a surplus, but its paltry $370M operating surplus isn’t nearly enough to offset the $3.4B operating deficit in NYC Transit, LIRR, and Metro-North.

And it is a myth that raising MTA Bridge and Tunnel tolls would cover the deficit – at least as long as the East River Bridges are free. The MTA operates the Brooklyn Battery Tunnel, Queens Midtown Tunnel, and Triborough Bridge, which each have parallel crossings that are free (in the case of the Triborough, it’s an issue of using an East River and Harlem River bridge). If the MTA increases tolls on their own crossings, it will simply divert more traffic to the free bridges.

I’m sure I’ll have something more insightful to say here later, but until then…

Don’t see any MTA bashing here, yet…looks like the paranoid, ignorant, and frustrated riders who depend on the MTA yet decry it daily – your target audience since they will be the ones who most strongly believe these myths as they believe the world will end in 2012 – have not yet read this post. Here’s to hoping some of them will read *this* MTA mythbusting post and it will change their opinion, unlike all the other mythbusting articles posted by transit advocates annually…

Taking the 30,000 foot level view is Fred Harrison, who wrote “wheels of fortune” a few years back. Basically, he analyzed transit systems all over the world and found one glaring fact: the only ones that are consistently well-funded are those that rely on local Land Value Taxes form the people who directly benefit. Fares are never enough, and General Funds get spent on other things more popular with the Governors and Legislatures – at the moment. It’s only by taxing the people who directly benefit, i.e. who live near enough a bus/train to use it, that transit can be paid for in perpetuity. Why should this be? Because of the added value a train or bus brings to a neighborhood. Assuming a train or bus is not located in the boondocks (though, even then, the Land Value Tax can pay for high speed trains), the LVT ALWAYS is enough to cover the cots AND still leaves enough for residents to profit from the increase in land values that transit inevitably brings.
All these other tweaks and protests will always go round and round until the freeloading residents (including me!) pay their fair share.

I know a few things that are not myths, that I see with my everyday eyes:

union-salaried workers walking along the platform at a SNAIL’s pace, with a paint brush and bucket in hand, casually painting any bannister, wall, support beam etc that has a SPOT of graffiti on it. This guy will probably stretch this job out for the entire day, even though the station is one of the smaller stations (with only one train line passing through it). Meanwhile, no matter how much paint is slapped over the grafitti, these stations still look like $hit with their ceilings, walls and platforms falling apart.

Service disruptions signs are printed with COLORED ink. Imagine how much they could save if they used BLACK ink only?

New electronic signs are put up to either tell us the time of day and or tell us how long we have to wait for the next train. Um, exactly how is this improving our commute?? Doesn’t everybody now have a cell phone that tells the time? And whether or not there is a sign to tell us when the next train will be…guess what? We’re STILL gonna have to wait for that train.

I’m sure there are countless other examples I’m simply not privvy to. Like I wonder what the purpose of those double-decker buses were…were they needed…have they made an IMPROVEMENT in people’s commutes? Is this line from the LIRR to G.C. really going to add that much value to warrant the cost?

I’m with you on the unionized workers and service change advisories, however, that last one helps call to attention to the signs, which is important. Also, they’re done en mass as stationery, which reduces the costs. Further, they’re likely done in-house by the print shop.

Electronic signs not only tell you the time, but they can be a critical way of communicating with passengers, especially deaf or hearing impaired riders. Yes, you still have to wait for the train, but research into countdown timer systems has shown a *perceived* improvement in the service, regardless of whether or not the service has actually improved. That isn’t to say the MTA isn’t working on ways to improve service on the L line, but this is part of a critical process of modernizing the system, enhancing passenger communications, and making the system safer.

You talk about things you see with your eyes – one thing you won’t necessarily see with your eyes is the new computer-based train control system on that same line, the L line, which allows them to run more trains on that line at a time and sync them up to each other to reduce delays, all while increasing safety through computer control of the trains and location awareness of each train. It is that system that feeds the flexible digital displays that you’ve so quickly deemed unnecessary. So you see, these signs are merely a part of that whole system.

I will grant you that Siemens, the company that was contracted for the automation system, ran into lots of obstacles, ran the project over budget, and past due. They’re masters at automation systems and while the NYC subway presents a formidable challenge to any modernization project due to its age, there was enough of a reason to demand Siemens pay up for the late delivery. So, that wasn’t the MTA’s fault, but it does have much to do with the issue with how public transit in America, New York, and the City is funded and how the MTA *MUST* contract out much of its work.

Double decker buses, much like buses vs cars, provide more capacity over the same road space to reduce congestion and increase throughput of a bus route. That’s an obvious benefit…not sure how you deem that to be a poor investment…

The connection to Grand Central will alleviate the severe overcrowding of Penn Station and allow more trains to run between Long Island and Manhattan, which means more frequent trains, more passengers, more throughput, more fares in the fare box. You think the Grand Central connection is expensive? Think about how much more the state spends on highways alone and compare that to transit. Now, take those numbers and put them over the number of people who utilize those modes of transportation.

You want to talk about spending money wisely? You want to slam the MTA for your crappy commute? How about you talk to your state senator and have them give the MTA the money it needs to fund the repairs they keep having to delay…oh but wait, they’re all corrupt (City legislators campaigned AGAINST East River tolls citing it would hurt their constituents…all <20% who drive…) …our state is crumbling and you want to slam the organization responsible for keeping New York City alive? How about you advocate for them instead, put the energy you spend bitching and moaning in your head to actually getting to the bottom of what's wrong with transit, and help us ALL out…I'm really getting tired of this…

I wouldn’t necessarily blame the unions for the MTA’s trouble, after all, they are meant to negotiate the best possible deals for their workers, and if politicians give away the house, then they’ll take that deal.

The MTA needs to grow a couple and institute hard hiring freezes and cut down on needless overtime until the union agrees to concessions. They should also consider more work at night, as the rush hours makes the 8-4 day pretty useless. A winter furlough for track maintenance workers, much like the furlough Metro-North used to have where a skeleton crew made emergency repairs when needed, should also be on the table. Each transit vehicle should also be tracked for fuel use.

I’m not yet sold on the 10% pay cut for management. A lot of these are guys who worked their way up the ranks from conductor or trackman jobs, and still pay union dues to their old unions should they ever need their old jobs back. We may see a lot of valuable talent return to conductor or track foreman jobs because they’ll be able to make more money.

I blame them for shortsightedness. In the quest to squeeze every penny out of the MTA, they are also squeezing the life out of the MTA. In much the same way that the UAW squeezed the life out of Detroit. It’ll take some time. But it’ll eventually arrive.

Now, as for why people are blaming the MTA for everything. It’s because they’re illiterate, in two senses of the word. They don’t read. And they certainly can’t add. Where did the subprime mortgage crisis come from? From people who wanted a house, didn’t have the money from one, and believed the snake oil salesman who said “Trust me.” What makes you think we can understand MTA financial reports?

It’s a lot easier just to blame someone than to do the hard work and make the numbers add up.

You don’t see the point of double decker buses? Since Las Vegas bought a fleet of double decker buses for a new service on the Strip, called The Deuce, patronage has increased dramatically – now other lines are also being equipped with double deckers. In London and Berlin most transit buses are double deckers. GO Transit operates them on commuter service in the Toronto area, and Megabus runs them to Boston and Washington. Of course, what works in one place won’t necessarily work in another, so intelligent people test them out, gather data, and draw conclusions. This is not a waste of money.
How about indicators when the next train or bus is coming? Many transit systems have had them for many years and they are much appreciated. In some areas, like Orange County CA, every bus stop has a 4 digit code and the transit authority’s phone number. Call the number, enter the code, and you are told when the next bus will arrive and its destination.
East River Bridge tolls? I have two issues besides the money. One is that after all these years, many people still don’t have/refuse to get EZ Pass. Of course, they can wait in line and pay the toll in cash. On an EZ Pass facility, you can also remove the pass and pay the toll manually if you don’t want a record of that trip. On the East River Bridges, a picture would be taken of every vehicle’s license plate no matter how you are paying. Big Brother is watching you! Those without EZ Pass would be billed, and that’s a lot of people. This would need yet another bloated bureaucracy to accomplish, eating up some of the revenue earned by the toll – the same is true of so-called congestion pricing which is really an admission fee. Oh, and here’s another problem – toll cheats who refuse to pay the bill. If you use a TBTA facility, you either pay in cash or use EZ Pass, enforced by a bar across the lane. This is not possible on the East River bridges. So far, there are no laws to force payment by those who refuse to pay the bill.

I don’t use MTA. I live & work on Long Island. Yet I am expected to help bail out MTA? Another in a long list of reasons I will be selling my home (which is paid for – your welcome President Obama – yes there are some citizens who actually pay off their mortgage) and moving out of New York a.s.a.p.

The MTA takes cars off the roads on Long Island. Otherwise, everyone on Long Island would have to drive everywhere – to the city and between towns. If the MTA didn’t exist, you’d be stuck in traffic all the time.

About the Author

Chris O'Leary is a transportation geek who has been reading and drawing maps since the age of 3. He thinks he knows far more than he does, but shares his somewhat informed opinions about mass transit, roads, and urban design here. He was born in Rhode Island and lives in New York City. He hates writing about himself in the third person.